Robert Diamond’s Atlas Mara Co-Nvest Ltd. (ATMA) agreed to buy ABC Holdings Ltd. and ADC African Development Corp. for as much as $265 million in the first acquisition by the investment firm of the former Barclays Plc (BARC) head.
BancABC offers financial services in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe, Atlas Mara, which trades in London, said in a statement late yesterday. ADC, which trades in Frankfurt, owns 47.1 percent of BancABC and 9.1 percent of Union Bank of Nigeria, the company said.
“We looked extensively at where the best opportunities would be in Africa and we had our sights on a high-quality, multi-country bank in one of the regions of Africa,” Diamond told reporters today in Gaborone, the capital of Botswana. “We are not passive investors and we want to truly add value.”
Diamond, who quit as Barclays chief executive officer in July 2012 after the British bank was fined for manipulating benchmark interest rates, and Ugandan entrepreneur Ashish Thakkar raised $325 million in an initial public offering for Atlas Mara in December. The investment firm, to which Diamond and Thakkar committed $20 million of their own money, is looking for African financial-services companies that can help businesses manage currency and commodity risks.
Atlas Mara said it agreed to pay 82 cents a share for BancABC and offered 1.25 of its own shares for each one of ADC’s. Investors with 34.1 percent of ADC’s stock have agreed to tender their shares, it said, adding that the acquisition will be funded from the proceeds of the IPO.
BancABC started in Botswana in 1956 and trades both in that country and on Zimbabwe’s stock exchange. Shareholders include Old Mutual Plc (OML) and the International Finance Corp., according to the lender’s website. Profit at BancABC rose 49 percent to 198 million pula ($22.5 million) last year, it said in a March 26 statement.
“Our objective is to build Africa’s premier financial-services group leveraging the access to capital, liquidity and funding that we at Atlas Mara can provide,” Diamond said in yesterday’s statement. “I am delighted that we will be merging with such high quality organizations as BancABC and ADC.”
Atlas Mara will invest US$100 million in BancABC after the transactions are completed, helping to boost the company’s capital-adequacy ratios, Douglas Munatsi, CEO of ABC Holdings, said in an interview today in Gaborone.
“The country that gives us the highest returns will receive the most,” he said. “Access to capital is part of what this transaction brings and I hope that from now the whole scenario of us being cash-hungry will change.”
ADC said in September it planned to boost its southern African holdings to $500 million in the next two to three years.
“Atlas Mara founders and board share ADC’s vision of creating a pan-African banking group,” ADC CEO Dirk Harbecke said in a separate statement yesterday.
The deal will give Atlas Mara “a highly scalable growth platform across the Southern African Development Community” which has annual gross domestic product figures of over $640 billion, it said.
During his tenure as CEO, Diamond sought to boost Barclays’s profitability by combining its African operations with those of Absa Group Ltd., the South African lender in which it acquired a majority stake in 2005. Last year Absa, now called Barclays Africa Group Ltd. (BGA), bought eight African units from its parent in an 18.3 billion rand all-share deal.
Atlas Mara, which asked the London Stock Exchange to suspend its shares today following its announcement about ADC, has gained 4.6 percent to 11.4 pence since its listing. ADC rose as much as 8.5 percent, the biggest intraday gain in more than two years, and was up 6.5 percent to 9.80 euros as of 1:45 p.m. in Frankfurt.
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